TaxPanacea

What will make my return more likely to be audited?

Everyone who files a tax return runs the risk of being audited, although some returns are more likely to be audited than others. Among the returns most likely to receive a full audit are those showing very high income, those that have a Schedule C attached for a small business, those with high medical or charitable deductions, and those with an Earned Income Tax Credit.

Generally, a good rule of thumb is that if you report something on your return that you believe looks a little suspicious, so will the IRS. If you are reporting less than a minimum wage income and yet you purchased a brand new home priced around half a million dollars, something is not adding up. You shouldn’t be surprised if you receive an invitation from the IRS to pay them a visit.

However, if there is a slight mistake on your return (you added incorrectly, or forgot to add some information that the IRS knows about), the IRS is not likely to request your company in their office; instead, they’ll send you a letter showing the discrepancy and ask you to either pay up (the discrepancy is almost always to their benefit, not yours) or send them the proof that they’re wrong.